INCOME TAXES

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

INCOME BEFORE TAXES

	Years Ended December 31,
	2024		2023		2022
U.S.	$	2,143	$	2,368	$	3,305
Non-U.S.	5,070		4,791		3,074
Total Income before taxes	$	7,213	$	7,159	$	6,379

TAX EXPENSE

Tax expense consists of:

	Years Ended December 31,
	2024		2023		2022
Current
U.S. Federal	$	606	$	176	$	653
U.S. State	88		60		124
Non-U.S.	1,012		1,098		815
Total current tax expense	1,706		1,334		1,592
Deferred
U.S. Federal	(210)		27		(175)
U.S. State	(25)		11		(36)
Non-U.S.	2		115		32
Total deferred tax (benefit) expense	(233)		153		(180)
Total Tax expense	$	1,473	$	1,487	$	1,412

The U.S. federal statutory income tax rate is reconciled to the effective income tax rate as follows:

	Years Ended December 31,
	2024		2023		2022
U.S. federal statutory income tax rate	21.0	%	21.0	%	21.0	%
Taxes on non-U.S. earnings1,2,3	(0.5)		(2.0)		(0.4)
U.S. state income taxes1	0.9		0.5		1.4
Reserves for tax contingencies	1.4		3.4		1.1
Employee stock compensation	(0.7)		(0.3)		(0.9)
Restructuring4	(0.3)		—		0.7
U.S. federal tax credits	(2.0)		(1.6)		(0.9)
U.S. valuation allowance4	0.9		(0.1)		(0.2)
All other items—net	(0.3)		(0.1)		0.3
Effective income tax rate	20.4	%	20.8	%	22.1	%

1	Net of changes in valuation allowance.
2	Includes U.S. taxes on non-U.S. earnings, net of foreign tax credits.
3	2023 includes (3.6)% deferred tax benefit resulting from a non-U.S. legislative change, offset by 3.6% deferred tax expense resulting from a full valuation allowance.
4	2024 includes (0.9)% deferred tax benefit resulting from an outside basis difference in assets held for sale, offset by 0.9% deferred tax expense resulting from a full valuation allowance.

The effective tax rate decreased by 0.4 percentage points in 2024 compared to 2023. The decrease was primarily attributable to a reduced benefit from taxes on non-U.S. earnings, offset by a decrease in accruals on various foreign tax matters. The Company’s 2024 non-U.S. effective tax rate was 20.0%, a decrease of 5.3 percentage points compared to 2023. The decrease in the non-U.S. effective tax rate was primarily attributable to changes in accruals on foreign tax matters and other foreign discrete adjustments, partially offset by increased expense on global minimum taxes.

The effective tax rate decreased by 1.3 percentage points in 2023 compared to 2022. The decrease was primarily attributable to the increased benefit of taxes on non-U.S. earnings and lower expense related to unremitted withholding taxes on non-U.S. earnings, partially offset by incremental tax expense for reserves. The Company’s 2023 non-U.S. effective tax rate was 25.3%, a decrease of 2.2 percentage points compared to 2022. The decrease in the non-U.S. effective tax rate was primarily attributable to increased benefit of taxes on non-U.S. earnings and lower expense related to unremitted withholding taxes on non-U.S. earnings, partially offset by incremental tax expense for reserves.

DEFERRED TAX ASSETS (LIABILITIES)

The tax effects of temporary differences and tax carryforwards which give rise to future income tax benefits and payables are as follows:

Deferred tax assets	December 31,
	2024		2023
Postretirement benefits other than pensions	$	50	$	55
Asbestos and environmental	373		405
Capitalized research and development	947		582
Employee compensation and benefits	143		148
Lease liabilities	263		258
Other accruals and reserves	396		196
Net operating losses	618		687
Capital loss carryover and outside basis differences	467		385
Tax credit carryforwards and other attributes	269		420
Gross deferred tax assets	3,526		3,136
Valuation allowance	(1,253)		(1,292)
Total deferred tax assets	2,273		1,844
Deferred tax liabilities
Deferred revenue	(244)		—
Pension	(1,485)		(1,132)
Property, plant and equipment	(371)		(441)
Right-of-use asset	(242)		(240)
Intangibles	(679)		(817)
Unremitted earnings of foreign subsidiaries	(516)		(542)
Other asset basis differences	(285)		(369)
Other	—		(5)
Total deferred tax liabilities	(3,822)		(3,546)
Net deferred tax liability1	$	(1,549)	$	(1,702)

1 As of December 31, 2024, Net deferred tax liability excludes $124 million that are included in Liabilities held for sale in the Consolidated Balance Sheet. Refer to Note 2 Acquisitions, Divestitures, and Assets and Liabilities Held for Sale.

The Company's gross deferred tax assets include $1,360 million related to non-U.S. operations comprised primarily of net operating losses and other tax attribute carryforwards in France, Germany, Luxembourg, Switzerland, and the United Kingdom. The Company maintains a valuation allowance of $1,066 million against a portion of the non-U.S. gross deferred tax assets and a valuation allowance of $187 million against the U.S. gross deferred tax asset, primarily related to capital loss carryovers. The change in the valuation allowance resulted in a decrease of $13 million, an increase of $458 million, and a decrease of $8 million to income tax expense in 2024, 2023, and 2022, respectively. If the Company determines that the likelihood of realization of existing deferred tax assets changes, a corresponding increase or decrease to valuation allowances will be recognized as an increase or reduction to income tax expense in the period that determination is made.

As of December 31, 2024, the Company recorded a $516 million deferred tax liability on all unremitted foreign earnings based on estimated earnings and profits of approximately $18.3 billion as of the balance sheet date.

As of December 31, 2024, the Company's net operating loss, capital loss, tax credit carryforwards, and other attributes were as follows:

Jurisdiction	Net Operating and Capital Loss Carryforwards		Tax Credit Carryforwards and Other Attributes
U.S. Federal	$	530	$	31
U.S. State	725		6
Non-U.S.	3,465		232
Total	$	4,720	$	269

Many jurisdictions impose limitations on the timing and utilization of net operating loss and tax credit carryforwards. Approximately $3,111 million of the non-U.S. net operating loss has no expiration period. The U.S. federal capital loss carryforward of $510 million expires in 2026. The remaining net operating loss, capital loss and credit carryforwards, and other tax attributes have expiration periods through 2044.

The table below summarizes the Company's change in unrecognized tax benefits for the years ended December 31, 2024, 2023, and 2022:

	Years Ended December 31,
	2024		2023		2022
Change in unrecognized tax benefits
Balance at beginning of year	$	1,225	$	1,086	$	1,061
Gross increases related to current period tax positions	64		89		64
Gross increases related to prior periods tax positions	12		181		31
Gross decreases related to prior periods tax positions	(17)		—		(19)
Decrease related to resolutions of audits with tax authorities	(31)		(132)		(3)
Expiration of the statute of limitations for the assessment of taxes	(9)		(3)		(8)
Foreign currency translation	(33)		4		(40)
Balance at end of year	$	1,211	$	1,225	$	1,086

As of December 31, 2024, 2023, and 2022, there were $1,211 million, $1,225 million, and $1,086 million, respectively, of unrecognized tax benefits that if recognized would be recorded as a component of tax expense.

The following table summarizes tax years that remain subject to examination by major tax jurisdictions as of December 31, 2024:

Jurisdiction	Open Tax Years
	Examination in progress	Examination not yet initiated
U.S. Federal	2017-2021	2022-2024
U.S. State	2013-2022	2023-2024
Canada	2019-2021	2022-2024
China	2013-2024	N/A
Germany	2013-2020	2021-2024
India	2014-2021	2022-2024
Malaysia	2018-2021	2022-2024
Puerto Rico	N/A	2020-2024
Switzerland	2019-2022	2023-2024
United Kingdom	2014-2022	2023-2024

Based on the outcome of these examinations, or as a result of the expiration of statute of limitations for specific jurisdictions, it is reasonably possible that certain unrecognized tax benefits for tax positions taken on previously filed tax returns will materially change from those recorded as liabilities in the Company's financial statements. In addition, the outcome of these examinations may impact the valuation of certain deferred tax assets (such as net operating losses) in future periods.

Unrecognized tax benefits for examinations in progress were $787 million, $803 million, and $640 million as of December 31, 2024, 2023, and 2022, respectively. Estimated interest and penalties related to the underpayment of income taxes are classified as a component of Tax expense in the Consolidated Statement of Operations and totaled $94 million, $74 million, and $5 million for the years ended December 31, 2024, 2023, and 2022, respectively. Accrued interest and penalties were $707 million, $612 million, and $557 million as of December 31, 2024, 2023, and 2022, respectively.